Currently before the court are defendants' motions: (1) to dismiss the
RICO Conspiracy Count (Count One of the Indictment); (2) to dismiss the
various substantive CAA Counts (Counts Three through Eleven); (3) to
strike prejudicial surplusage from the Indictment; and, (4) for an order
directing an evidentiary hearing to determine the nature and extent of,
and the appropriate sanctions for, the disclosures made during the course
of plea and cooperation negotiations and agreements by at least one
co-defendant in violation of a pre-existing joint defense agreement. For
the reasons that follow below, defendants' motion to dismiss the RICO
Conspiracy Count (Count 1 of the Indictment) is DENIED; defendants'
motion to strike prejudicial surplusage from the Indictment is
Page 3
DENIED; defendants' motion to dismiss the various substantive CAA Counts
(Counts Three through Eleven) is DENIED without prejudice to renewal
based on the evidence presented at trial; and, defendants' motion
requesting the court to issue an order directing an evidentiary hearing
to determine the nature and extent of, and the appropriate sanctions
for, the disclosures made during the course of plea and cooperation
negotiations and agreements by at least one co-defendant in violation of
a pre-existing joint defense agreement is DENIED.

BACKGROUND

A. Relevant Procedural History

On February 13, 2002, the government indicted defendants and charged
them with various crimes stemming from their asbestos abatement
activities. Initially, the government charged seven additional
individuals, Thomas Reed, Gary Alvord, Anthony Mongato, Sheon Dimaio,
Michael Shanahan, Robert O'brey, and Gerald Lindquist, with crimes
relating to their asbestos abatement activities. Since the government
indicted them, the seven co-defendants have entered guilty pleas.
Previously, the government brought an order to show cause why the court
should not issue an order precluding consideration of motions filed by
David Bernfeld and Jeffrey Bernfeld, or future appearances of any sort,
in the absence of their having entered an appearance in this matter and
having gained admission to practice law in the Northern District of New
York, generally or for purposes of this case. This motion is now moot
because both David Bernfeld and Jeffrey Bernfeld have entered their
appearance in this matter and have gained admission to practice law in the
Northern District of New York. Since their admission, however, the court
granted the government's motion to disqualify Jeffrey Bernfeld from
representing defendants Alexander Salvagno and AAR Contractor, Inc., as
of February 27, 2003. See Dkt. No. 128, Mem. Decision and Order. For
these
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reasons, the Government's order to show cause is moot.

B. The Alleged Scheme

The alleged scheme is set forth in the Indictment and the government's
response papers, which the court summarizes briefly as follows. From 1988
to 2000, Alexander and Raul Salvagno owned and operated AAR, which grew
to be one of the largest asbestos abatement companies in New York State
with a significant presence in Central and Upstate New York. Their
asbestos abatement operation, however, is alleged to have failed to
comply with various federal and New York State regulations, which apply
to the removal of asbestos to protect workers, the public, and the
environment.*fn1 In 1990, defendants allegedly devised and implemented a
scheme that defrauded clients of millions of dollars through false
representations as to how AAR would perform its asbestos abatement work.
Dkt. No. 94, Government's Am. Resp. at 2-3.

In an effort to reduce their employees' "time-on-the-clock," the most
costly component of asbestos abatement projects, defendants are alleged
to have convinced a close friend, Timothy Carroll, to start an accredited
laboratory and an air and project monitoring company, Analytical
Laboratories of Albany, Inc., ("ALA"), in which Alexander Salvagno would
secretly own a one-half share. By controlling ALA, defendants were able
to circumvent air and project monitoring regulations and falsify test
results. ALA, acting as an "independent" laboratory, would mail AAR's
clients the falsified test results. Defendants defrauded their clients by
leading them to believe that, and charging them as if, they performed the
asbestos abatement in accordance with the applicable regulations when in
fact they had not. This alleged scheme allowed defendants to complete
their abatement projects in less time than if they were to have adhered
to the regulations. Id. at 3-5; Dkt.
Page 5
No. 112, Indictment at 9-10.

During the alleged conspiracy, Mr. Carroll deposited ALA-derived funds
in his own bank account and subsequently withdrew half of those funds in
cash and gave them to Alexander Salvagno. As part of their conspiratorial
arrangement with Alexander Salvagno, ALA and Mr. Carroll filed false W-2
forms, which made it appear that Mr. Carroll received all of ALA's
funds. ALA failed to provide a W-2 form to Alexander Salvagno and
falsified its corporate tax returns while Alexander Salvagno's income tax
returns failed to reflect the additional income he received from ALA.
Alexander Salvagno also directed AAR to pay a "RASH Services, Inc.,"
instead of AAR's General Manager, Thomas Reed, a significant portion of
Mr. Reed's salary in order to conceal Mr. Reed's true income and allow
AAR to pay lower payroll taxes. Again, AAR filed false tax documents as
did Mr. Reed. Dkt. No. 94, Government's Am. Resp. at 5-6; Dkt. No. 112,
Indictment at 10-13. In addition, defendants are alleged to have obtained
large sums of money through mail fraud, which in turn they committed to
AAR in order to sustain and expand its illegal activities. Id. at 6.

DISCUSSION

I. Defendants' Motion to Dismiss RICO Count

Defendants move to dismiss the RICO Conspiracy Count (Count 1) arguing
that the underlying acts upon which the government relies are
insufficient to sustain such a charge. The government bases the RICO
Conspiracy Count on money laundering predicates, which in turn rest upon
an underlying mail and wire fraud scheme. Defendants contend that the
conduct in support of the underlying mail and wire fraud does not, as a
matter of law, constitute mail and wire fraud. Defendants also contest
the Indictment's association-in-fact RICO enterprise, which it defines
as
Page 6
an association of a certain and distinct group of seven separate legal
entities. Defendants contend that most of these entities did not exist,
legally or otherwise at the time the association-in-fact RICO enterprise
allegedly formed. Moreover, they suggest that aside from AAR and ALA, the
entities that comprise the association-in-fact enterprise were
competitors with interests adverse to each other. Defendants also contend
that the RICO Count is constitutionally vague. See Dkt. No. 102, Defs.'
Mem. of Law in Supp. of Mot. at 2-3.

A. Sufficiency of the Indictment

&nbsp; The standard for the legal sufficiency of an indictment is
well-established. An indictment is sufficient when it contains the
elements of an offense, notice to the defendant of the charges he must be
prepared to meet, and information sufficient to protect the defendant from
the risk of double jeopardy. United States v. Bailey, 444 U.S. 394, 414,
100 S.Ct. 624, 636, 62 L.Ed.2d 575 (1980). "An indictment need only track
the language of the statute and, if necessary to apprise the defendant of
the nature of the accusation against him, state the time and place in
approximate terms." United States v. Covino, 837 F.2d 65, 69 (2d ...

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